[Note: More recently-asked question are at the top of this page; a more scripted
"What is ICP?" question-and-answer is at the bottom of the page].
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November 2002: As to why ICP and the Fair Finance Watch are challenging HSBC's
proposal to acquire the scandal-plagued subprime lender Household International, click here: ICP's HSBC Watch. And click here for a round-up of other
publications' coverage of these (HSBC) issues.

* * *

Consumer arcane: Question: My credit card company just sent me a notice,
along with my monthly bill, saying I no longer have the right to sue them, but can only
use mandatory arbitration. Can they do this? Whats it all about? What
can I do?

Answer: Many companies -- including credit card issuers -- are trying to
limit their customers rights to sue them, or to join class actions against them, by
slipping mandatory arbitration clauses into their contracts, or quietly
informing their customers of this new contract term, as a near-invisible
bill-stuffers. An appeals court in California last year ruled that BankAmerica could not
impose mandatory arbitration on customers it had before 1992 (Baddie v. Bank of America,
First District Court of Appeals, California, A068753, November 3, 1999, decided). The
right to a jury trial is Constitutionally-protected, and taking it away (at least from
existing customers) requires more notice and due process than a bill stuffer.

That ruling applies only in California, however. Delaware, the
bank-friendly state, recently clarified its law, to specify that banks
chartered in the state can amend their agreements with consumers to include mandatory
arbitration clauses, and that bill inserts are a permissible way to inform consumers. Bank
Ones First USA unit is requiring mandatory arbitration; as is American Express (in
every state except California, due to the court decision described above).

While arbitration makes sense in some contexts (say, when agreed to as
dispute resolution between two already-sophisticated businesses), it ill-serves consumers.
While filing fees for lawsuits are $100 or less in most of the country, a consumer
required to arbitrate is often required to pay far more than this to start the
arbitration, and then is required to pay a daily fee for the arbitrator, between $600 and
$1,600 a day. The complainant gets much less discovery (to see if the problem is a pattern
at the company, as Sears and others have been found to illegally continue to try to
collect debts discharged in bankruptcy, for example). Most lawyers are no longer willing
to take arbitration on a contingency-fee basis.

Congress, currently expressing concern about banks and others
sharing and selling of private consumer information, should address this abuse, which is
taking away consumers rights. But the bank and credit-card issuer lobby throws money
around in Washington -- check out outgoing Senate Banking Committee Chairman Phil Gramm, for historic example.
For now, if you have a choice between a credit card or other company which imposes
mandatory arbitration, and one that doesnt -- wed suggest going with the one
that doesnt take away your right to sue.

* * *

CRArcane: Inner Citys received some questions about how a particular
bank loophole works, and how a current Congressional bill would expand the loophole. While
dry, heres a fast answer:

Question: what are the implications of a provision to expand the powers of
so-called CEBA banks?

Heres a thumb nail sketch of the issue, beginning with what a
CEBA bank is.

CEBA stands for Competitive Equality Banking Act, a law
passed in 1987. Ironically, CEBA was passed with the stated intent of closing a loop hole.
To get around interstate banking restrictions, companies had been setting up
non-bank banks. Their argument was, since the Bank Holding Company Act defines
a bank as a company which both accepts demand deposits and makes commercial
loans, as long as a company did only one of these two things, it was not a bank. Congress
supposedly closed the loophole in 1987, but grandfathered in 57 non-bank banks
that had been set up. The owners of these grandfathered institutions could keep owning
them, without becoming bank holding companies. Thats how, for example, Merrill Lynch
came to own a bank.

Through time, CEBA and the non-bank bank loophole was broadened to cover
FDIC-insured credit card banks. See Section 2(c)(2)(F) of the Bank Holding Company Act.
Through this loophole, a number of other non-traditional companies got into
(non-bank) banking. The loophole was supposed to be kept limited by the constraints and
growth-limits that were put on CEBA banks.

The Federal Reserve,
interestingly enough, has expressed concern about the proposals to expand this loophole,
saying it would give the non-traditional owners of CEBA banks an unfair competitive
advantage. Some say the Fed is just still sore that companies out-thought the Fed in the
years before 1987 -- the Fed doesnt mind loopholes, as long as it controls them.

The Office of the Comptroller of the Currency has said it has no concerns
about these two provisions -- many of the CEBA banks are regulated by the OCC. ICP
haslearned that since CEBA credit card banks are technically not banks (even though
theyre FDIC insured), the OCC allows an existing national bank to acquire a CEBA
bank as an operating subsidiary -- thus allow a bank to buy an FDIC-institution with no
Bank Merger Act application subject to public comment. An op-sub application is, according
to the OCC, not formally subject to public comment. So its a loophole that eats at
the already-shrinking scope of the current CRA.

Theres another wrinkle to this loophole: most CEBA banks,
while lending nationwide, limit their assessment area to a single MSA where they have
their headquarters. Many of these headquarters / shrunken assessment area are in Delaware, Utah, and Arizona.
Consecos Green Tree (high
interest rate lender, mostly on mobile homes) owns a CEBA bank in South Dakota, that
its now trying to convert into a federal savings bank, and move to Las Vegas. Ah,
American banking -- the land of the loophole. Until next time...

It was great to read your site and see the good work that people across the country are
doing. I found you comments about environmental justice and community reinvestment
thoughtful.

Here in Portland Oregon...things are interesting. I live in the King Neighborhood which
in 1990 was 65% African American. The city has re-invested in N/NE to promote community
development and encouraged large N/NE businesses to do the same. Emanuel Hospital and the
Police Dept have had incentive home buying program within N/NE where traditionally most
people of color live and now we are seeing a trend of economic & ethnic gentrification
in this area.

...Overall there has been a huge shift in the racial and economic profile of this
neighborhood towards being middle class and predominately European American.
Proportionally, the minority population in Portland is so small that these shifts are
pretty significant. A similar things has happened in the Queen Anne district in Seattle.

Do you have any thoughts about how community reinvestment is accomplished with the
minority &/or low-income occupants being the financial beneficiaries rather than being
the displaced? Have you seen any examples of this that could provide models for other
communities?? In the next few months King Neighborhood Assoc is hosting a community
process to discuss the types of economic development residents want to see on Martin
Luther King Jr. Blvd... Thanks for your time.

ICPs answer: While the Community Reinvestment Act directs banks to fairly
serve low- and moderate-income (LMI) neighborhoods rather than LMI people,
weve been able to make the argument that the law was passed, in 1977, because banks
refused to lend to poor PEOPLE and people of color. Therefore, we try to make the bank
regulators see and act on the difference between lending in LMI neighborhoods that serves
LMI people, or lending in LMI neighborhoods that in fact has the result of driving LMI
people out.

One way to do this is to look at your local banks Community
Reinvestment Act examinations, or performance evaluation. You could ask for
one at a bank branch (though they might direct you to their central office). Read the exam
closely, to see what type of projects the regulators gave the bank CRA credit for -- was
it entirely gentrifying-type lending? You can also get banks Home Mortgage
Disclosure Act (HMDA) data, from the bank or online (youll find the URL on our Links Page). With this data, you can
review banks lending census tract by census tract, and probably figure out if they
only lend on middle- or upper-income housing.

Here in the South
Bronx its easy to figure this out, because virtually all middle-income housing
is new construction -- so youll see a bank that made sixty mortgage all in a cluster
(new development), and none in the surrounding area (existing homes, lower income). We
raise this to the regulators... [See ICPs Using CRA Page]. Hope this is
helpful.

* * *

Q: What IS Inner City Press/Community on the Move? Is it a
newspaper or a community group?

A: Yup, its an unwieldy name. Heres how it came about: in
1987, a group of us who were homesteaders
here in New York City -- fixing up long abandoned buildings as housing -- decided to
create a newspaper, to spread the word that these vacant buildings could be reclaimed as
affordable housing before they deteriorated or were demolished. We began Inner City
Press / La Prensa del Pueblo, on a mimeograph machine.

Then dozens of people contacted us, asking us to help them organize new
homesteading buildings, in the Bronx and Brooklyn. So we started a community group,
Community on the Move. When we finally incorporated it, we chose the name(s)
Inner City Press / Community on the Move. But people, then and now, generally
refer to the group as Inner City Press, or just Inner City. There
you have it.

Q: If the group began with homesteading, how did it get into Community Reinvestment
Act enforcement? (And, by the way, what the heck IS the Community Reinvestment Act?)

A: As the first few dozen members of our group were starting to fix
up abandoned buildings in the Bronx in
the last 1980s, we inevitably asked ourselves, Why did these buildings become
abandoned in the first place? And, a less historical but more practical question:
Why is it so difficult to get loans and property insurance here in the South
Bronx? The second question answers the first. Many buildings in inner city area --
not only the South Bronx and Harlem, but on the South Side of Chicago, in Detroit, Los Angeles, D.C., became
abandoned because their owners could no longer get affordable property insurance, or loans
to fix up or even sell their buildings. Some less responsible (lets say it --
criminal) owners burned their buildings for insurance money. But others simply
couldnt keep them up, and stopped repairing them, or let the government take them,
for back taxes.

The decisions of banks and insurance companies to refuse to make loans or
write policies in certain, usually predominantly minority, areas -- is called
redlining. The origin of this word was a practice that some insurance companies and banks
engaged in, of drawing a red line on a map around the areas they didnt want to do
business in. Redlining was one of the social ills that the Community Reinvestment Act (CRA), passed
by Congress in 1977, sought to combat. The CRA provides that banks have a continuing and
affirmative duty to meet the credit needs of their whole communities, including low- and
moderate-income neighborhoods.

When in the South Bronx in the late 1980s we found that the
homesteaders and their neighbors had difficulty getting loans, regardless of their credit
histories, we began to look into the Community Reinvestment Act, and how to begin
enforcing it here. To make a long story short, we filed successful CRA challenges to banks
in 1992, and five in 1994, resulting in commitments of over $100 million in new lending in
the South Bronx and Harlem, three new bank branches, and two loan production offices.
Since then, weve worked with groups in other cities and states, trying to make CRA
enforcement (and the community redevelopment it makes possible) more systematic.

Q: How did ICP go from being a South Bronx Community Reinvestment Act enforcer to
working in other areas of the country?

A: After our six successful CRA challenges in New York City in
1994, we began to look at banks which had operations not only here, but in other states. Chase Manhattan, for example --
which, despite the fact that it only has bank branches in the Northeast and Texas, does
more mortgage lending in California than in New York (to say nothing of the Bronx). When
we looked at Chases lending patterns, by race and income, we decided we needed to
take a more systematic approach. And so we began to work with other groups. These groups,
in turn, asked for our help in bringing accountability to other mega-banks: Wachovia, Wells Fargo, Bank of America, Washington Mutual (which in late 2001
bought NY-based Dime Savings), Bank
One, KeyCorp (which, while based in Cleveland, is big in upstate New York), etc.. We still
look closely at New York-based banks, including the colossus, Citigroup, and the chaos-surrounded J.P. Morgan Chase -- but also
mid-sized predators like North Fork Bank, and underperforming savings banks like Roslyn
Savings and some others we're not ready to name yet. Based outside the U.S., we
watch Royal Bank of Canada, Mizuho, and, now more than ever, HSBC.

Q: What happened with the Inner City Press newspaper? Does this web site replace it?

A: Yes and no. From 1987 to 1994, we published Inner City Press /
La Prensa del Pueblo every two months, moving from a mimeograph machine to a regular print
shop, but still doing the layout by hand. As our Community Reinvestment Act challenges and
other advocacy began to take more and more time, and generate news we needed to get out
more frequently than every two months, the newspaper went on a kind of hiatus, appearing
periodically, with special issues on the selling off of the Bronx, on
environmental justice issues like pesticide plants and incinerators in the Bronx, and
investigative journalism as we got more adept at using the Freedom of Information laws (FOIA).

For a long time, we debated whether to shift onto the Internet. Many
people raised the fact that our constituency is generally NOT on the Internet, and that
wed be forgetting our roots if we made this switch. But after a time, this stance
seemed like putting our heads in the stand. All the public libraries in the Bronx, and
most libraries in other communities we work in, have public Internet access. Even though
one of Inner City Press earlier editorial exhorted people (hyperbolically) to
Throw Your TV Set Out the Window (and get more into real life), the advent of
technologies like WebTV, and cable television providers providing Internet service, make
the technology more accessible. As we got more subscribers in different parts of the
country, postage was killing us. Etcetera, etcetera. Long story short -- we are now
beginning posting our Inner City
Press journalism on this site, and only printing hard copies for street distribution
on issues that require this approach.

Q: Whats next?

A: Hey -- we dont like to reveal our plans. This began when we were
targeting abandoned buildings for fix-up, and continued into our Community Reinvestment
Act advocacy work. Our adversaries all have substantially more money than we do -- what we
have is flexibility, a lack of bureaucracy (as well, of course, as the moral high ground).
To project what we'll do in the future, consider this more scripted (and
chronological) presentation:

In 1999, ICP won several more important CRA precedents. One involved the
investment bank Lehman Brothers, which sought to acquire the failing Delaware Savings Bank
with scarcely a CRA plan in place, and while being active in underwriting the
mortgage-backed securities of various subprime lenders, including Delta Funding, which was
sued by NYS authorities for predatory lending. After ICP's and DCRAC's comments, the
OTS encouraged Lehman Brothers to pledge $2.2 billion in low and moderate income lending,
and to identify and avoid predatory lending practices, including in the loan pools Lehman
does the underwriting for. Another joint ICP / DCRAC protest ended with GMAC
pledging $6 billion in low and moderate income lending. ICP advocates for the
appropriate application of CRA to Internet banks -- see ICP's Hot Issues page for more.
And, since things are too busy to update this much, click here for cites and links to some
recent news articles about our work.